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The Effects of Taxes and Socioeconomic Variables on Market Work and Home Production in Norway in the Years 1970 to 2000

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Abstract

This paper analyses significant forces of the allocation of time to different home production activities, as developed by Gronau, in a data set consisting of decennial time-use surveys of Norwegian households. The theoretical framework consists of joint allocation of time model, where household decisions to allocate time between the market and the household are analyzed simultaneously. The estimation takes place within a limited dependent variables framework. As an alternative to the usually employed Tobit model, Cragg´s double-hurdle model is used, so as to be able to model individual decisions in a two step framework, discerning between the wish to participate and the amount of time to invest in different activities. The conclusion of the paper is that taxation has a significant effect on the allocation of time to market and non-market activities. There is evidence in favour of more disaggregation of time-use, but the overall message of the home production literature – that explicit consideration of the market-versus-home production margin can improve estimates of labor supply elasticities - is upheld.

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  • Schwierz, Christoph, 2003. "The Effects of Taxes and Socioeconomic Variables on Market Work and Home Production in Norway in the Years 1970 to 2000," Memorandum 33/2003, Oslo University, Department of Economics.
  • Handle: RePEc:hhs:osloec:2003_033
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    File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2003/Memo-33-2003.pdf
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    4. Flood, Lennart, 1998. "The Structure of the Tax-system and the Estimation of Labor Supply Models," Working Papers in Economics 1, University of Gothenburg, Department of Economics.
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    6. Klevmarken, Anders, 1998. "Microeconomic Analysis of Time-use Data. Did we reach the promised land?," Working Paper Series 1998:12, Uppsala University, Department of Economics.
    7. Gronau, Reuben, 1987. "Home production -- A survey," Handbook of Labor Economics,in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 4, pages 273-304 Elsevier.
    8. Ugo Colombino & Steinar Strøm & Rolf Aaberge, 2000. "Labor supply responses and welfare effects from replacing current tax rules by a flat tax: Empirical evidence from Italy, Norway and Sweden," Journal of Population Economics, Springer;European Society for Population Economics, vol. 13(4), pages 595-621.
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    10. Fortin, Bernard & Lacroix, Guy, 1997. "A Test of the Unitary and Collective Models of Household Labour Supply," Economic Journal, Royal Economic Society, vol. 107(443), pages 933-955, July.
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    12. Paul van den Noord, 2000. "The Tax System in Norway: Past Reforms and Future Challenges," OECD Economics Department Working Papers 244, OECD Publishing.
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    Cited by:

    1. Klevmarken, N. Anders, 2005. "Estimates of a labour supply function using alternative measures of hours of work," European Economic Review, Elsevier, vol. 49(1), pages 55-73, January.

    More about this item

    Keywords

    home production; allocation of time; double-hurdle model; labor supply elasticities;

    JEL classification:

    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • D19 - Microeconomics - - Household Behavior - - - Other

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